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May 22nd, 2009 (Modified on May 27th, 2009)

Update1 Axed GM/Chrysler Dealership Owner Blogs About Experience



Last week, John Isgett, President of Raceway Automotive Group in South Carolina, received franchise termination letters from Chrysler and GM. Chrysler is aiming to pull their franchise by June 9 and GM by October 2010. Isgett has agreed to blog about the ‘winding down’ experience for Automotive News.

Here are some excerpts from his first blog post, written yesterday:

I then took the [franchise termination] letter to the conference room, called my key managers in and after a few moments of truly thinking it through, asked them all, “How are we negatively impacted by this letter?”

We all began to offer our opinions, one at a time. Darren in fixed operations said warranty was now only 15 to 18 percent of our business. Bert in sales said as much as he liked the “new” product, we made all of our money in today’s market with certified preowned and other used models. The loss of the expense in the new vehicle line could only help. Reesie in accounting said without the multiple franchise fees we pay every month, our bottom line could do nothing but increase.

With this, we committed as a team to move forward in doing what we all do best, selling cars. New or used, we’re in the transportation business, not the franchise business. Finding the best value in the market for our customers is our job.

Service and parts? We will maintain them both. We won’t be able to do warranty, but with the reduction of expenses, we feel we could easily become even more competitive in the marketplace, increasing our customer-pay business to easily absorb the warranty income loss.

We ended agreeing that things happen for a reason. We’ll pull through offering our customers the best value in transportation, but now with a margin that we all can live with.

This blog should be really interesting to follow. A first-hand glimpse into the American auto industry, especially in its current state, should prove fascinating. You may need a username and password to read the blog on Automotive News — but don’t worry, it’s fast and easy to set up. Let us know what you think about Isgett’s experience.

Update1: Here’s the link (http://www.autonews.com/section/BLOG10) to follow Mr. Isgett’s blog “Cut Off By Chrysler.” So far there has been a new post every other day or so.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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